Jobs Growth Anemic, yet Senior Talent in Shortage in Certain Sectors


Leading up to the BLS employment report on Friday, ADP estimated private payrolls rose 114,000 in July. The BLS figures came in 117,000 nonfarm employment and 154,000 in total private employment. Gains were seen in health care, retail trade, manufacturing, and mining; while Government employment continued to decline. Manufacturing employment increased in by 24,000, professional and technical services increased by 18,000, Government employment decreased by 37,000. The unemployment rate stayed put at 9.1% (13.9 million people).

AESC / Executive Search

According to the Association of Executive Search Consultants’ (AESC), 66% of search professionals have a positive prediction for their industry in the second half of the year.  The biggest growth in demand for senior talent is in the Energy/Natural Resources sector. The United States is experiencing a “sustained resurgence of demand” according to AESC President, Peter Felix. Worldwide, the General Management/CEO/COO functions are anticipated to experience the greatest shortage of talent, followed by Business Development and then Engineering.  Firms surveyed for the 2011 AESC Member Mid-Year Outlook Report indicate plans to hire more consultants and researches through the end of 2011 to keep up.

Felix stated “All this points to the re-emergence of executive talent scarcity and the critical need for organizations to find top quality leaders in the new dynamics of world markets. The executive search profession looks forward to strong demand for its services in helping clients to plan and execute their talent management strategies for the future.” Over half the companies surveyed recently according to SmartBriefs for CFOs report a disconnect between open positions and the skill sets of candidates who apply.

Beige Book / Business Outlook Survey

The Beige Book finds labor market conditions to continue to be soft in most Federal Reserve Districts. Some districts reported modest hiring increases, within specific sectors, such as: advertising in Boston, and manufacturing in Cleveland. Wage pressure is reported in consulting and advertising in Boston, in high-tech, energy, and transportation sectors in Kansas City, and in specialized information technology workers in San Francisco. Firms responding to the Business Outlook Survey report weak manufacturing activity in July, recovering slightly however from negative territory in June.

U.S. GDP / Conference Board / Staffing Industry Analysts

US GDP grew 1.3% in Q2, however Q1 was revised down to 0.4% (from the previous estimate of 1.9%). Kathy Bostjancic, director of macroeconomic analysis, The Conference Board, said “Anemic consumption, still declining state and local government spending, tepid business investment, and soft housing activity all combined to offset some strength in exports. Concerns about the weak labor market and rising food and energy prices continue to weigh on consumer confidence.”  Staffing Industry Analysts research shows that staffing industry growth typically correlates with GDP growth, with staffing industry revenue tending to grow faster as GDP improves.

Corporate Earnings versus Small Business Earnings

The Manpower CEO, Jeffrey Joerres, recently announced in an interview that the U.S. economy is experiencing “summer doldrums” and employers maintain extreme caution in their hiring. Joerres said however that he expects the economy to pick up again by the fall. This is in direct contrast to strong second quarter earnings reports from companies such as McDonald’s (up 15%), General Electric (up 21%) and Caterpillar (up 44%).

Wages and salaries accounted for just 1% of economic growth in the 18 months following the end of the recession (June 2009) and corporate profits 88%. This is in stark contrast to previous post-recessions periods. One reason may be that US firms are expanding abroad but not at home, adding 2.4 million jobs in foreign countries while cutting 2.9 million in the US in the 2000s, according to the Commerce Department.

A marked difference in this post-recession according to Carl Van Horn, the director of the Center for Workforce Development at Rutgers University, is that the housing market would typically “revive in the early stages of an economic recovery, driving demand for building materials, furnishings and appliances — creating jobs.” This is not the case today however.

Unfortunately, earnings trends for small businesses have not enjoyed the same buoyancy as large corporations, remaining negative in June, according to the NFIB.  “Small-business owners are registering a vote of ‘no confidence’ in the federal government,” said NFIB Chief Economist Bill Dunkelberg.